If you’re a small business owner in Carlsbad, Oceanside, Vista, or anywhere in San Diego County, you’ve probably asked:
“What can I actually deduct as a business expense?”
Whether you run a construction company, plumbing business, HVAC service, marketing agency, coffee shop, or design firm, understanding deductible expenses can significantly reduce your taxable income — and keep more cash in your business.
At Accounting Fresh CPA Inc., we help local business owners maximize deductions while staying compliant. Here’s your ultimate guide.
What Is a Deductible Business Expense?
The Internal Revenue Service (IRS) defines a deductible expense as one that is:
- Ordinary (common in your industry)
- Necessary (helpful and appropriate for your business)
If it meets those two criteria, there’s a good chance it’s deductible.
The Ultimate List of Deductible Business Expenses
1. Advertising & Marketing
Marketing is fully deductible.
Examples:
- Google Ads & Facebook Ads
- Website hosting & design
- SEO services
- Business cards & flyers
- Sponsorships (local sports teams, events)
- Branded apparel with logo
👉 For local San Diego contractors, this includes HomeAdvisor, Yelp Ads, and local chamber memberships.
2. Vehicle & Mileage
If you use your vehicle for business:
- Standard mileage rate (per IRS rate)
- Gas
- Repairs & maintenance
- Insurance
- Registration
- Lease payments
- Depreciation (if owned)
Construction & trades businesses often save thousands here.
Pro Tip: You must track business vs personal use.
3. Equipment & Tools
Especially important for contractors and trades:
- Power tools
- Ladders
- Heavy equipment
- Computers
- Monitors
- iPads for field estimates
Large purchases may qualify for:
- Section 179 deduction
- Bonus depreciation
4. Office Expenses
- Office supplies
- Printer & ink
- Postage
- Furniture
- Internet
- Phone bills
- Software subscriptions
If you use QuickBooks Online, Buildertrend, ServiceTitan, Monday.com — those are deductible.
5. Home Office Deduction
If you work from home in a dedicated space:
- Portion of rent or mortgage
- Utilities
- Internet
- Property taxes
- Home insurance
Must be used regularly and exclusively for business.
6. Rent (Office, Warehouse, Shop)
If you lease:
- Office space
- Retail storefront
- Storage unit
- Equipment yard
Rent is fully deductible.
7. Wages & Payroll
- Employee wages
- Payroll taxes
- Health insurance
- Workers comp
- Employer retirement contributions
- Bonuses
If you’re an S-Corp owner, your W-2 wages are deductible to the business.
8. Contract Labor
1099 subcontractors:
- Electricians
- Framers
- Designers
- Freelancers
- Bookkeepers
Make sure you file 1099-NEC forms properly.
9. Insurance
Business-related insurance is deductible:
- General liability
- Professional liability
- Commercial auto
- Workers compensation
- Cyber liability
- Umbrella policies
10. Professional Fees
- CPA fees
- Bookkeeping
- Tax preparation
- Legal fees
- Business consulting
Yes — hiring a CPA is deductible.
11. Business Meals
Typically 50% deductible (current IRS rules).
Examples:
- Client lunches
- Vendor meetings
- Business travel meals
Must be business-related and documented.
12. Travel
- Flights
- Hotels
- Rental cars
- Uber/Lyft
- Parking
- Tolls
Must be primarily for business purposes.
13. Education & Training
- Continuing education
- Certifications
- Industry conferences
- Trade association dues
- Online courses
Great for contractors upgrading licenses or certifications.
14. Interest & Bank Fees
- Business loan interest
- Line of credit interest
- Equipment financing
- Bank service charges
- Merchant processing fees (Stripe, Square)
15. Depreciation
Large purchases can often be deducted over time:
- Vehicles
- Machinery
- Furniture
- Computers
- Office build-outs
Strategic depreciation planning can significantly reduce taxable income.
Common Expenses That Are NOT Deductible
- Personal groceries
- Personal clothing (unless branded uniforms)
- Commuting miles (home to office)
- Personal gym memberships
- Fines & penalties
Special Considerations for San Diego Contractors & Trades
Construction and service businesses in Carlsbad and North County often miss:
- Job costing software subscriptions
- Fuel allocation between vehicles
- Equipment repairs vs capitalization
- Inventory tracking
- Sales tax handling
- Owner health insurance deduction
If you’re a plumber, electrician, HVAC contractor, remodeler, landscaper, or concrete contractor — your deductions can be complex.
Don’t Forget: Structure Matters
Your deductions may vary depending on whether you’re:
- Sole proprietor
- LLC
- S-Corporation
- Partnership
For example:
- S-Corp owners must pay reasonable wages
- QBI deduction rules may apply
- Payroll strategy impacts tax savings
Proper structure can save tens of thousands annually.
Final Thoughts: Keep More of What You Earn
The difference between average bookkeeping and strategic accounting is often thousands of dollars in missed deductions.
If you’re a small business owner in:
- Carlsbad
- Oceanside
- Vista
- Encinitas
- San Marcos
- Anywhere in San Diego County
We can help you:
- Track expenses properly
- Maximize deductions
- Reduce audit risk
- Plan proactively for taxes